The Supreme Court on Monday sought response from Vedanta, State Bank of India and others on Renaissance Steel India’s appeal alleging that the Anil Agarwal-led company is ineligible to bid for the takeover of bankrupt Electrosteel Steel India, as its affiliates in Zambia has been found guilty of criminal misconduct punishable with two or more years in jail.

Renaissance Steel is contesting Rs 5,320-crore resolution plan by the Vedanta group for Electrosteel, which has been approved by the Kolkata bench of the NCLT as well as the National Company Law Appellate Tribunal.

State Bank of India’s insolvency plea against Electrosteel, which is one of the 12 initial NPA accounts identified by the Reserve Bank of India (RBI) for resolution, was admitted by the Kolkata Bench of National Company Law Tribunal in July 2017. Electrosteel owes Rs 13,000 crore to lenders, led by SBI.

Renaissance has questioned the eligibility of Vedanta to bid for takeover of Electrosteel on the grounds that Zambia-based Konkola Copper Mines (KCM), which is a “connected person” of the former, was found guilty under the Zambian Environment Protection and Pollution Control Act 1990.

A Bench led by Justice RF Nariman sought response from Vedanta, resolution professional Dhaivat Anjaria, SBI and Electrosteel after Renaissance told the apex court that the NCLAT erroneously upheld the NCLT’s April 17 order that had allowed Vedanta to make an upfront payment of Rs 5,320 crore to lenders for its proposed acquisition of Electrosteel Steel India. “The error committed by the NCLAT is to hold that a juristic person can never be imprisoned and that no individual was actually convicted in case of KCM.”

According to Renaissance, the Zambian Act fulfils the disqualification requirements of Section 29(d) of the IBC which provides that a person will be disqualified if its related party is not eligible due to any conviction. Since KCM had been convicted for an offence under the Zambian law, punishable with imprisonment for two years or more, Vedanta also stands disqualified under the IBC to submit a resolution plan for Electrosteel. “However, despite such disqualification, the company’s resolution plan was accepted by the resolution professional and approved by the committee of creditors of Electrosteel and thereafter approved by NCLT on April 17,” it said.

It further said the appellate tribunal, despite accepting that KCM is a related party of Vedanta, allowed the latter to submit the resolution plan on the ground that the ineligibility is attracted only by a natural person.

Renaissance alleged that Vedanta and KCM are habitual offenders and have committed various acts of human rights and environmental violations including Vedanta’s copper smelting plant in Tuticorin which is mired in controversy due to gas leaks and bad effluent management, thus causing severe health problems to residents in the area. It also pointed out to large scale violations by Vedanta Alumina refinery at Lanjigarh in Orissa.

Vedanta has offered to pay Rs 5,320 crore upfront to the lenders of the bankrupt steelmaker. In addition, it would offer financial creditors 7.5% equity in lieu of their debt, taking the total offer to Rs 6,148 crore. RSIPL had offered Rs 3,000 crore as an upfront payment and another Rs 4,404 crore payment at the end of the fifth year.